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Green credit regulation, induced R&D and green productivity: Revisiting the Porter Hypothesis

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  • Zhang, Dongyang

Abstract

This paper investigates the causal effect of green credit regulation policy on green productivity and revisits the Porter hypothesis. By separating R&D into environmentally induced R&D and production R&D, we find that green credit regulation policy significantly improves green total factor productivity (GTFP) growth rather than input-output TFP. We further show that environmentally induced R&D is the driver of GTFP, while production R&D significantly improves the input-output TFP. Finally, our estimations indicate that internal financing intermediation is used to finance environmental R&D projects due to the high cost of environmental innovation.

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  • Zhang, Dongyang, 2021. "Green credit regulation, induced R&D and green productivity: Revisiting the Porter Hypothesis," International Review of Financial Analysis, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:finana:v:75:y:2021:i:c:s1057521921000661
    DOI: 10.1016/j.irfa.2021.101723
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